BILL ANALYSIS Ó AB 1389 Page 1 Date of Hearing: May 1, 2013 ASSEMBLY COMMITTEE ON AGRICULTURE Susan Talamantes Eggman, Chair AB 1389 (Committee on Agriculture) - As Amended: April 24, 2013 SUBJECT : San Joaquin Valley Quality Cotton District. SUMMARY : Makes inoperative, as specified, the statutes and regulations the San Joaquin Valley Quality Cotton District (district), as of January 1, 2014, until specified. Specifically, this bill : 1)Requires the statutes and regulations of the district to become inoperative January 1, 2014, unless either of the following occurs: a) A resolution is approved in accordance with statutory procedures of the district, as of January 1, 2013, to continue operation of this chapter; or, b) The Secretary of the California Department of Food and Agriculture (CDFA) receives a petition from members of the San Joaquin Valley cotton industry, and determines, that due to industry circumstances, it is in the best interest of the state and industry, that specific sections of the district's statutes should be activated. If CDFA makes such a determination, they may establish a committee to advise them, made up of cotton growers, handlers of whole cottonseed, handlers of raw cotton fiber, and representatives of cotton ginning organizations. 2)Requires CDFA to post to their Internet Web site, if either 1) a) or b) occurs. 3)Requires specified statutes to remain operative and to be administered by CDFA dealing with certified cottonseed, certified cottonseed and colored cotton, and colored cotton. 4)Permits CDFA to not administer these provisions or any provisions of the district statutes, unless they determine there are sufficient funds in the district account, or from other sources, including the cotton industry, to pay the costs incurred by CDFA. AB 1389 Page 2 EXISTING LAW establishes the district as all counties within the San Joaquin Valley where cotton is grown, creates an 11 member board made up of seven cotton growers, three industry members (cottonseed oil crushers, handlers of raw cotton fiber, cotton ginners or their employees thereof), and one public member. Statute provides authority for the board to establish specified cotton quality standards; review and approve cotton varieties for planting in the district; conduct tests of cotton production and quality as specified, including accessing fees necessary for conducting the tests; hold periodic referendums, as specified, for continuation of the district; require all approved cotton varieties to be labeled, as specified; and, make recommendations to CDFA on all matters related to the district. Additional powers and duties are given to the board upon implementation of promotion and research funding, as specified. Provides specific requirements for referendum votes for operation of the district and permits referendum votes whenever the board proposes changes to specified varieties quality standards; authorizes an enforcement funding assessment of not more than six dollars ($6) per hundredweight on cottonseed delinted for planting purposes; authorizes assessments for promotion and research funding on cotton growers in the district not to exceed one-half of one percent of each growers gross cotton value of the previous year; and, provides provisions for enforcement and violations, as specified. FISCAL EFFECT : Unknown. Legislative Counsel has keyed this bill fiscal. COMMENTS : California cotton was known as the King in the '60s and '70s due its high quality, being of long staple lengths and high tensile strength. In 1967, the "One-Varity Cotton District" was created, requiring one variety of cotton be grown in the district to prevent cross contamination with other lower quality varieties of cotton. This proved to be very effective until newer, better varieties of cotton were developed, and then the statutes were amended to expand the permissible cotton types that could be grown. Due to the improved higher quality cotton varieties that can now be grown outside the San Joaquin Valley, reduced market prices, and water shortages, the valley's planted acreage has had a steady decline over the last two decades. While the planted acreage hit a high of over 1.1 million acres in the late 90s, in AB 1389 Page 3 2013 it is estimated to be 300,000 acres, down nearly 37% from last year. This greatly reduces the concerns of cross contamination of varieties, and the need for enforcement of this body of law. Therefore, the industry, in an effort to reduce costs to its producers, has requested to make the district statutes dormant, while requiring limited enforcement of three specific sections critical to the integrity of cotton varieties and purity. Procedures are included to reactivate portions, or the entire relevant statutes, as well as a caveat, in case funds are depleted and CDFA can no longer cover their costs, unless an alternative funding source occurs. CDFA estimates that it will cost roughly $50,000 to operate the program annually. The program has a reserve of approximately $150,000. It is unknown what the funding source will be after the program funds are fully expended. REGISTERED SUPPORT / OPPOSITION : Support California Cotton Growers and Ginners Association Opposition None on file. Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084